Craig,
Well, first of all, let me note my timing: You may or may not recall that last spring I posted that I thought that the stock would be in the 20s sometime in August/September, and that I expected that that would be a bottom, with the stock going up from there to all time highs in the winter of '00, possibly having a parabolic move depending on MMC. So much for timing.
The only thing I base my opinion on is: the stock is here now. I don't think that Sandisk would have filed if their investment bankers didn't tell them that they could get a price within 10% or so of where they were. Perhaps they told them 75. I don't know, obviously I'm not privy to that information. But registration statements don't get filed without having at least some notion of where the offering is going to go off. They will guage interest now, and if it is sufficient at the right price, they'll go ahead with it. If not, they'll pull it or reduce it.
They're at a $200 million run rate now, they're tiny. That is one of the big differences between them and the bigger companies that you mention, INTC and MSFT. And the big difference between them and internet companies is that they are actually making money, they have intellectual property that has been so far successfully defended and is a key to several future megamarkets. This is a more substantial barrier to entry than name recognition, as long as it holds.
They're riding a wave. If they can in fact double revenues next year and the year after, they will be roughly a billion dollar company. They've got a decent shot at that next year, I think, and a plausible shot for the year after. That's their story. You swallow it or you don't. Will I be buying the secondary? No. I've got enough SNDK, it's one of my five biggest positions. |
